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Saturday, June 22, 2013

If you are contrarian by nature you might be looking at gold-related investments today.

Gold mining stocks in particular are out of favor.

Jim Rogers has been pretty sharp in making long term calls on commodity prices. The article below provides an update on Rogers thinking on gold and oil.

HardAssetsInvestor:A lot of investment banks have recently called an end to the commodities supercycle that began more than a decade ago. Do you think they’re wrong?

Jim Rogers: I'm delighted to hear that. Bull markets climb a wall of worry. I'm not quite sure where the supply is coming from that would cause the bull market to end. Maybe they know something I don’t. But when you look back at the stock bull market from 1982 to 2000, stocks collapsed in 1987, ’89, ’90, ’94, ’97, ’98. And every time, people said the bull market is over. But it wasn’t. This bull market in commodities will definitely come to an end someday. But someday is not here yet.

HAI:What signs do you look for to determine when the bull market is close to ending or has ended?

Rogers: Well, when there’s massive new supply coming on stream, then we’ll have the end of the bull market. But the world has consumed more agriculture products than it has produced for a decade now. But worse than that, we’re running out of farmers. The average age of farmers in America is 58; in Japan, it’s 66. Many of the industrial metals are now below the cost of production.

And nearly everybody has cut back dramatically on their expansion plans and investment plans. Oil reserves are declining pretty steadily around the world. We do have shale oil, which has caused a rise in supply. But that’s only in the U.S; the rest of the world has declined. Moreover, it remains to be seen how long the oil boom in the U.S. will continue.

HAI:All the talk recently has been about the recent plunge in gold. You’ve been saying, for a long time now— even when prices were hitting record highs—that you weren't going to buy until prices corrected to $1,200. Are you still planning on buying there?

Rogers: Yes, if it gets there. I bought more today [June 18], as a matter of fact. I bought a little bit, not much, over the last few days in case this was the bottom. I would not be surprised if there's another chance to buy lower later on, but I'm buying and I own it. I haven't sold any.

HAI:How do you determine whether gold is a good value or not? What has to happen for you to get completely out of gold and stay out?

Rogers: All these things will end in a bubble some day. Long bull markets always end in a bubble or mania before it’s over with. And when there's a bubble in gold, I hope I'm smart enough to get out. We haven't seen a bubble yet. Until recently, if you went around any U.S. city, you would see signs outside many jewelry stores saying “We buy gold.” And the American people line up to sell gold. Later there’ll be signs there saying, “We sell gold,” and people will be lining up to buy it in big ways. That hasn’t happened yet.To continue reading the article, click here

Friday, June 21, 2013

It’s not often that value investors have an opportunity to hear unedited investment advice from someone who has not only assembled a market-beating track record over decades but has also served as mentor to other accomplished value investors, including Seth Klarman, Meryl Witmer, and David Winters. Michael F. Price has managed money since 1974 when he joined Mutual Series under Max Heine. Price became partner in 1982 and took over Mutual Series after Heine’s passing in 1988. He amassed a market-beating track record, significantly growing the firm and selling it to Franklin Templeton in 1996.Price’s U.S. equity portfolio, valued at $763 million at the end of Q1 2013, included Alleghany (Y), Citigroup (C), FXCM (FXCM), Hess (HES), Intel (INTC), and McGraw-Hill (MHP) among its largest positions. In this speech, Michael Price spoke about portfolio construction and mentioned a few current ideas such as oil and gas company, Hess Corporation (HES) and Hospira (HSP), a manufacturer of generic drugs. He also recommended the book,There is Always Something to Do by Peter Cundhill

Monish Pabrai has an excellent long term track record as a hedge fund manager and luckily for us he is willing to share his approach to investing.Monish thinks that 98% of the investment opportunities that come across his desk belong in the "too hard" pile. He does not like investing in technology companies because he thinks the industry changes too fast and the future cash flows of companies are just too hard to predict.